AKGIM/EXM/FM/03

Ajay Kumar Garg Institute of Management, Ghaziabad

PRE –UNIVERSITY TEST Roll No.:

MODEL SOLUTION
Course MBA Semester II
Session 2023-24 Section 1&2
Subject Quantitative Techniques for Management Sub. Code KMBN206
M.M. 100 Time 3 Hrs

OBE Remarks:

Q. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

CO No. 3 3 4 4 5 5 3 4 5 3 4 5
Bloom’s L1 L1 L2 L2 L2 L2 L2 L2 L2 L2 L4 L4 L4 L5 L5 L4 L4 L5
Level
(L1 to
L6)*
Weightage CO3: 24 CO4: 24 CO5: 24

* Blooms Level: L1: Remember, L2 Understand, L3 Apply, L4- Analyze, L5: Evaluate, L6: Create

Note: Attempt all the questions.

Q. No. Section-A Marks: 10x2=20
1 Discuss the concept of decision tree.
Sol. Decision tree analysis requires construction of a diagram (also called decision tree) that shows, at a
glance, when decisions are expected to be made – in what sequence, their possible consequences, and
what are the resultant payoffs. A decision tree consists of nodes, branches, probability estimates, and
payoffs. There are two types of nodes: decision nodes (or act node ) and chance nodes (or event node
•). A decision node indicates places where a decision-maker must select one alternative course of action
among the available actions. The alternative courses of action are shown as branches or arcs emerging out
of decision node. Each course of action results in a chance node.
2 List the characteristics of operations research.
Sol. Characteristics of operations research are following:
 Decision Making
 Scientific Approach
 Objective-Oriented Approach
 Inter-Disciplinary Approach
 Holistic Approach
 Mathematical Model
 Optimum utilization of scarce resource
3 Describe the objective of MODI and stepping stone method.
Sol. After Obtaining the initial basic feasible solution from NWC, LCM or VAM the next step is to test
whether the solution is optimal or not. The method which is used for this purpose is called Stepping Stone
method and after that MODI method is used to make it optimal. It is based on the concept of dual variable
that are used to evaluate empty cells & their opportunity cost which indicates that the solution is optimal
or not.
4 Explain primal-dual relationship of linear programming.
Sol. The primal-dual relationship in linear programming establishes a connection between the primal
(original) and dual (associated) linear programming problems. In the primal problem, the goal is to
maximize or minimize an objective function subject to constraints. The dual problem involves finding
bounds for the primal's objective function while maximizing or minimizing a different function. The
optimal solutions of the primal and dual problems are linked through the duality theorem, stating that if a
feasible solution to the primal problem has the same objective value as the dual problem's feasible
solution, both solutions are optimal.
5 Point out concept of travelling salesman problem.
Sol. A salesman is assigned ‘n’ cities to visit. He is given distances between all pairs of cities and
instructed to visit each of the cities once in a continuous trip and return to the origin, using the shortest
route. In this context, we define the visit to the cities in a sequence, ending at the same city where it
begins including a visit to each of the cities only once.
Example-

To

A B C D E

A ---- 4 7 3 4

B 4 ---- 6 3 4
From
C 7 6 ---- 7 5

D 3 3 7 ---- 7

E 4 4 5 7 ----

6 Classify two-person-zero-sum game.

Sol. A game is referring to a situation where two or more players are competing. It involves the players
who have different goals or objectives. There may be a number of possible outcomes with different values
to them.
Two person zero sum game: In such situations there are only two players and the algebraic sum of gains
and losses of all the players is zero, i.e., the amount won by one player is exactly equal to the amount lost
by other.
7 Contrast the structure of Kendall’s notation.
Sol. Kendall’s notation is used to express queue models. This notation has following parts.

For example, M/M/I: ∞/FCFS

8 Categorize Johnson’s Model of sequencing.

Sol. Johnson’s rule: A procedure that minimizes the time taken when scheduling a group of jobs on two
workstations.
 Step 1. Find the shortest processing time among the jobs not yet scheduled. If two or more jobs
are tied, choose one job arbitrarily.
 Step 2. If the shortest processing time is on workstation 1, schedule the corresponding job as early
as possible. If the shortest processing time is on workstation 2, schedule the corresponding job as
late as possible.
 Step 3. Eliminate the last job scheduled from further consideration. Repeat steps 1 and 2 until all
jobs have been scheduled.

9 Compose the features of crashing of operations.

Sol. Crashing is employed to reduce the project completion time by spending extra resources (cost). The
reduction in normal time of completion will increase the total budget of the project.
 10 List the rules for drawing a network diagram.
Sol. Rules for drawing a network diagram:
• Each activity is represented by only one arrow.
• The arrow indicates logical precedence
• The length of the arrow does not depend on duration
• The direction of arrow is important
• An activity can start only after previous activity finishes
• Looping is not permitted
• Network should be neat & Clear however, a network may take any shape.
• Dummy activity may be used whenever required.

Note: Attempt all questions.

Q. No. Section-B Marks: 3x10=30
11 Reduce the following two-person-zero-sum game to 2x2 order and obtains the optimal strategies for
each player and the value of the game.
Player B
Player A B1 B2 B3 B4
A1 3 2 4 0
A2 3 4 2 4
A3 4 2 4 0
A4 0 4 0 8

Sol. There is no saddle point exist in the above game.

Using dominance rule reduce the matrix
a) If all elements of a column (say 1st column) are greater than or equal to the corresponding element
of any other column (say 2nd column), then 1st column is dominated by the 2nd column. The 1st
column is hence removed from the payoff table.
b) If all elements of a row (say 1st row) are greater than or equal to the corresponding element of any
other row (say 2nd row), then 1st row is dominates the 2nd row. The 2nd row is hence removed from
the payoff table.
c) It is also possible that a particular row (column) dominates the average of two other rows
(columns). In that case, one will delete any one row (column), which was involved in finding the
average.

Player B
Player A B3 B4
A3 4 0
A4 0 8

Now using Analytical Formula, the optimal solution would be

Optimal Strategies for player A (0, 0, 0.67, 0.33)
Optimal Strategies for player B (0, 0, 0.67, 0.33)
Value of the game (V) = 2.67
The game is favors to player A.
12 Provide the optimal job sequence involving three machines M1, M2, M3 in the order M1, M2, M3 for the
following:
Job
Machine J1 J2 J3 J4 J5 J6 J7
M1 10 8 12 6 9 11 9
 M2 6 4 6 5 3 4 2
M3 8 7 5 9 10 6 5
Point out total elapsed time and idle time for each machine.

Sol. Handwritten solution attached

 13 A mini truck owner from his past experience estimated that the maintenance cost per year of a truck
(whose purchase price is Rs 1,50,000) and the resale value will be as follows:
Year Maintenance Cost Resale Value
1 10,000 1,30,000
2 15,000 1,20,000
3 20,000 1,15,000
4 25,000 1,05,000
5 30,000 90,000
6 40,000 75,000
7 45,000 60,000
8 50,000 50,000
Plan the time at which it would be profitable to replace the truck.
Sol. Using Replacement theory

Tn An
C-St+sum
Year Mt St Sum Mt C Mt Tn/n
1 10000 130000 10000 150000 30000 30000.0
2 15000 120000 25000 150000 55000 27500.0
3 20000 115000 45000 150000 80000 26666.7
4 25000 105000 70000 150000 115000 28750.0
5 30000 90000 100000 150000 160000 32000.0
6 40000 75000 140000 150000 215000 35833.3
7 45000 60000 185000 150000 275000 39285.7
8 50000 50000 235000 150000 335000 41875.0
Hence this machine is to be replaced every three years.

Q. No. Section-C Marks: 5x10=50

14 Attempt any one question.
14 (i) Operation research is a very powerful tool and analytical process that offers the presentations of an
optimal solution in spite of its limitations. Discuss.
Sol. Operation Research is a tool employed to increase effectiveness of managerial decisions as an
objective supplement to the subjective feeling of the decision –maker. Managerial decision making is a
process by which the management, when faced with a problem, chooses a specific course of action from a
set of possible option.
In making a decision, a business manager attempts to choose the most effective course of action in the
given circumstances in attaining the goal of the organization.
Following are the application of operation research in managerial decision making:
1) Better exploration and understanding of the trigger of the problem
2) Generate more and efficient alternatives.
3) Generating a knowledge base from the surrounding which can help in the validation of
constraints.
4) Using the existing Knowledge for choosing the optimum solution from the available solution.
5) To find optimal solution for a problem.
OR applications can be extended to all functions of management –
Finance, Marketing, Operations, Information Technology, and Human Resource by using-
 Transportation Problem
 Assignment Problem
 Game theory
 Queuing theory
 Job sequencing
 Replacement model
 Project Scheduling (using PERT/CPM)
  Optimization techniques

Limitations of use of OR in decision making

1) A model is constructed only to understand the problem and attempt to solve problem. They are
not to be considered as the real problem or system.
2) It is difficult to study the changes in the operation of the system
3) The model building is very costly for some type of system.
4) Many times it is difficult to perform experiments on these models.
5) OR models are primarily for quantitative variables.
It should always be kept in mind that OR alone cannot make the final decision. It is just a tool and simply
suggests best alternatives but in the final analysis many business decisions will involve human element.
Thus, OR is at best a supplement to rather than a substitute for management.

14(ii) A timber merchant manufactures three types of plywood. The data below give the production hours per
unit in each of three production operations, maximum time available and profit per unit.
Operations (Hours) Profit/Unit (Rs)
Plywood I II III
Grade A 2 2 4 40
Grade B 5 5 2 30
Grade C 10 3 2 20
Available time 900 400 600
Find i) Formulate this Problem as LPP model.
ii) Solve this LPP model using Simplex method to find how many units of each grade of
plywood should be produced to maximize the total profit.
iii) Find the total profit and unused resource.
Sol. Let x1, x2 and x3 be the number of units produced for type I, II and III.
Max Z= 40 x1 + 30 x2 + 20 x3
Subject to
2 x1 + 5 x2 + 10 x3 ≤ 900
2 x1 + 5 x2 + 3 x3 ≤ 400
4 x1 + 2 x2 + 2 x3 ≤ 600
and x1 , x2 ,x3 ≥ 0
Solution using Simplex Method the optimal solution would be:
i. Quantity produced for grade A (x1) = 137.50 Units
ii. Quantity produced for grade B (x1) = 25 Units
iii. Quantity produced for grade C (x1) = NIL
iv. Total Optimum profit = Rs. 6250

15 Attempt any one question.

15(i) Suppose a grocer is faced with a problem of how many packets of milk to stock to meet tomorrow’s
demand. All the packets of milk left at the end of the day are worthless. Each packet of milk is sold for Rs
8/- and it is purchased for Rs 5/-. The previous records of the number of packets of milk demanded as
follows:
Number of Packets Demanded Probability
13 .05
14 .10
15 .20
16 .30
17 .25
18 .10
 What should be the optimal solution for decision of the grocer concerning the number of packets of milk
to stock.
Sol. Prepare a pay off matrix for the above problem
List of Actions
Events 13 14 15 16 17 18 Probability
13 39 34 29 24 19 14 .05
14 39 42 37 32 27 22 .10
15 39 42 45 40 35 30 .20
16 39 42 45 48 43 38 .30
17 39 42 45 48 51 46 .25
18 39 42 45 48 51 54 .10
EP 39 41.6 43.4 43.6 41.4 37.2

Since the maximum expected profit is Rs. 43.6 and this is associated with 16 packets. Hence this
grocer is suggested to stock of 16 units to maximize his profit.

15(ii) A cement factory manager is considering the least way to transport cement from his three manufacturing
centers P, Q, R to depot A, B, C, D The weekly production and demand along with transportation cost are
given below:
Origin Destination Supply
A B C D
P 2 2 2 1 30
Q 10 8 5 4 70
R 7 6 6 8 50
Demand 40 30 40 40
Express and find the optimal transportation schedule.
Sol. Using Vogel’s Approximation Method
Origin Destination Supply
A B C D
P 2 (30) 2 2 1 30
Q 10 8 5 (30) 4 (40) 70
R 7 (10) 6 (30) 6 (10) 8 50
Demand 40 30 40 40
 Optimal transportation schedule
From To Qty Cost
P A 30 60
Q C 30 150
Q D 40 160
R A 10 70
R B 30 180
R C 10 60
Total Transportation Cost 680
16 Attempt any one question.
16(i) Categorize the concept of Game theory in a competitive situation? Classify the process of solving a two-
person zero-sum game.
Sol. It is concerned with the study of decision-making in situations where two or more rational opponents
are involved under conditions of competition and conflicting interests.
A game is refers to a situations where two or more players are competing. It involves the players who
have different goals or objectives. There may be a number of possible outcomes with different values to
them.
Two person zero sum game: In such situations there are only two players and the algebraic sum of gains
and losses of all the players is zero, i.e., the amount won by one player is exactly equal to the amount lost
by other.
a) Saddle point: A saddle point (or Equilibrium point) of a payoff matrix where the maximum of row
minima coincides with the minimum of the column maxima. The payoff at the saddle point is called the
value of the game and is obviously equal to maximax values of game
b) Principle of dominance
Sol. The dominance principles are used to reduce the size of pay-off matrix for two person zero-sum
games without saddle point. By doing so if one can obtain a 2*2 game, one can solve it with the help of
the algebraic method.
It can be used as:
i. If all elements of a column (say 1st column) are greater than or equal to the corresponding element
of any other column (say 2nd column), then 1st column is dominated by the 2nd column. The 1st
column is hence removed from the payoff table.
ii. If all elements of a row (say 1st row) are greater than or equal to the corresponding element of any
other row (say 2nd row), then 1st row is dominates the 2nd row. The 2nd row is hence removed from
the payoff table.
iii. It is also possible that a particular row (column) dominates the average of two other rows
(columns). In that case, one will delete any one row (column), which was involved in finding the
average.

c) Graphical method

16(ii) A department has five employees with five jobs to be performed. The time (in hours) each man will take
perform each job is given in the following matrix:
Employee
I II III IV V
A 10 5 13 15 16
Jobs B 3 9 18 13 6
C 10 7 2 2 2
D 7 11 9 7 12
E 7 9 10 4 12
Obtain the optimal assignment schedule.
Sol. Handwritten solution attached
 17 Attempt any one question.
17(i) Explain the Johnson’s method for solving sequencing problem for n jobs on 2 machines, n jobs on 3
machines, and n jobs on k machines.
Sol.
Johnson’s rule: A procedure that minimizes the time taken when scheduling a group of jobs on two
workstations.
 Step 1. Find the shortest processing time among the jobs not yet scheduled. If two or more jobs
are tied, choose one job arbitrarily.
 Step 2. If the shortest processing time is on workstation 1, schedule the corresponding job as early
as possible. If the shortest processing time is on workstation 2, schedule the corresponding job as
late as possible.
 Step 3. Eliminate the last job scheduled from further consideration. Repeat steps 1 and 2 until all
jobs have been scheduled.

Similarly, the other combination of job and machines may also be accommodated
1) ‘n’ jobs on two machine
2) ‘n’ jobs on three machine
3) ‘n’ jobs on ‘k’ machine

17(ii) Assume that at a bank teller window the customers arrive in their cars at the average rate of twenty per
hour according to Poisson distribution. Assume also that bank teller spends an average of two minutes per
customer to complete a service, and the service time is exponentially distributed. Customers, who arrive
from an infinite population, are served on a first-come-first-serve basis, and there is no limit to possible
queue length.
i) What is the expected waiting time in the system?
ii) What is the mean number of customers waiting in the system?
iii) What is the mean number of customers waiting in the queue?
iv) What is the probability of zero customers in the system?
v) Find utilization factor.
Sol. Given
Arrival Rate (λ) = 20 per hour
Service Rate (μ) = 30 per hour
i) Expected waiting time in the system (Ws) = 1/(μ-λ)
Ws = 1/10 hour = 0.1 hour
ii) Mean number of customers waiting in the system (Ls) = λ/(μ-λ)
Ls = 20/10 = 2 customers
iii) Mean number of customers waiting in the queue (Lq) = λ2/μ(μ-λ)
Lq = 1.33 customers
 iv) Probability of zero customers in the system
= Idle Time (1-ρ) where ρ=λ/μ
= 0.33
v) Find utilization factor (ρ) = λ/μ
= 0.67

18 Attempt any one question.

18(i) Write the applications of CPM and PERT techniques in project planning & control.
Sol. Network Analysis plays an important role in project management. By analyzing a network, which is
a graphic depiction of ‘activities’ and ‘event’, the planning, scheduling and control of a project become
much easier.

Program Evaluation & Review Technique (PERT)

Critical Path Method (CPM)
Similarities between PERT and CPM:
a) Both follow the same steps and use network diagrams
b) Both are used to plan the scheduling of individual activities that make up a project
c) They can be used to determine the earliest/latest start and finish times for each activity
CPM PERT
CPM uses activity oriented network. PERT uses event oriented Network.
Durations of activity may be estimated with a Estimate of time for activities are not so accurate
fair degree of accuracy. and definite.
It is used extensively in construction projects. It is used mostly in research and development
projects, particularly projects of non-repetitive
nature.
Deterministic concept is used. Probabilistic model concept is used.
CPM can control both time and cost when PERT is basically a tool for planning.
planning.
In CPM, cost optimization is given prime In PERT, it is assumed that cost varies directly
importance. The time for the completion of with time. Attention is therefore given to minimize
the project depends upon cost optimization. the time so that minimum cost results. Thus in
The cost is not directly proportioned to time. PERT, time is the controlling factor.
Thus, cost is the controlling factor.
18(ii) The following table shows the various Activities of a network along with their time estimates.
Immediate Estimated duration work (Weeks)
Activity Predecessor Optimistic Most Likely Pessimistic
A - 2 4 6
B - 6 6 6
C - 6 12 24
D A 2 5 8
E A 11 14 23
F B, D 8 10 12
G B, D 3 6 9
H C,F 9 15 27
I E 4 10 16
Find:
i) Draw the network diagram
ii) Expected Completion time of the project
iii) Critical Path
iv) Standard Deviation of the Project
Sol. Handwritten solution attached